Ethereum [ETH], at the time of writing, exchanged hands at $1,341. On September 22, the alt completed a 30% retracement from its September high of $1,789. Very different from what many investors expected from the most important month of the year. On the bright side, alts were trading at a steeper discount and signs of a rally recovery are flashing.
ETH may not have retested the 2022 lows, but the 30% discount pushed it back to mid-July levels. Another 30% decline will certainly trigger this YTD low test. While another crash was still a possibility, ETH’s latest performance suggests a near-term bullish retracement was in the works.
Feeding the bulls
A 30% discount in the last two weeks was big enough to attract a lot of attention and potential hoarding. ETH currency outflows recorded a significant increase in outflows. This was the largest outflow recorded since mid-June.
About 104,000 ETH flew off exchanges between September 21st and 22nd. This equated to about $132 million in buying pressure. In contrast, around 18,000 ETH were deposited into exchanges during the same period. Foreign exchange outflows more than offset the amount of inflows, thus confirming a strong rise in demand.
ETH’s 180-day Market Realized Value (MVRV) ratio has been falling since September 10, around the same time the price fell. This confirmed that most people who held ETH at the time, especially those who bought before the merge, are out of money. However, the same metric registered a slight rise in the last two days.
The MVRV pivot on September 21 confirmed an increase in the level of demand near current lows. It also reflects higher outflows from exchanges seen in the measures of currency outflows versus inflows.
ETH price action and indicators also reinforced near-term bullish expectations. The six-hour chart of ETH revealed a strong bearish candle towards the end of the session on September 21st. The pullback pushed the price lower than its previous low a day earlier. Despite this result, the Relative Strength Index (RSI) recorded a higher low compared to its previous high.
The above result highlighted a price divergence from the RSI. This is often considered a bullish result and could be a sign that ETH is heading for a bullish weekend.
Additionally, ETH’s on-chain metrics combined with price action boosted ETH’s near-term upside potential. Investors should note that ETH is not yet oversold despite the latest negative situation. Hence, there is still a chance for a further decline below current levels.